Crl.rp/397/2021 Of The Income Tax Department v. M/S. Jenious Clothing Private Ltd

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 7 DAY OF MARCH, 2022 BEFORE THE HON'BLE MR. JUSTICE H.P. SANDESH CRIMINAL REVISION PETITION NO.397/2021 BETWEEN: THE INCOME TAX DEPARTMENT BY ITS INCOME TAX OFICER (TDS) WARD-2(1), H.M.T BHAVAN NO 59, BELLARY ROAD BANGALORE-560032 (BY SRI T.N.C.SRIDHAR, ADVOCATE FOR SRI JEEVAN J NEERALGI, ADVOCATE) … PETITIONER AND: 1. M/S. JENIOUS CLOTHING PRIVATE LTD NO 1-35/5/1, INDUSTRIAL SUBURB TUMKUR ROAD, YESHWANTHPUR BANGALORE (A COMPANY REGISTERED UNDER COMPANIES ACT REP BY ITS MANAGING DIRECTOR - SUNIL V RAHEJA) 2. SUNIL V RAHEJA MANAGING DIRECTOR M/S JENIOUS CLOTHING PRIVATE LTD NO 1-35/5/1, INDUSTRIAL SUBURB TUMKUR ROAD, YESHWANTHPUR BANGALORE … RESPONDENTS (BY SRI BHAIRAV KUTTAIAH, ADVOCATE AND SRI S.ANNAMALAI, ADVOCATE) THIS CRIMINAL REVISION PETITION IS FILED UNDER SECTION 397 OF CR.P.C PRAYING TO SET ASIDE THE ORDER OF DISCHARGE OF 2 RESPONDENT HEREIN AND ETC. THIS CRIMINAL REVISION PETITION COMING ON FOR ADMISSION THIS DAY, THE COURT MADE THE FOLLOWING: O R D E R Heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondents. 2. This revision petition is filed challenging the order dated 07.12.2019 passed by the Trial Court discharging the respondent No.2 herein in C.C.No.89/2019. 3. The factual matrix of the case is that the proceedings was initiated against the second respondent herein who was arraigned as accused No.2 before the Trial Court invoking Section 276B of the Income Tax Act (for short ‘the Act’) wherein an application was filed for discharge of the respondent No.2 herein of the offence punishable under Section 276B of the Act contending that accused No.2 is not the Managing Director of accused No.1 but he is only the Director of accused No.1 and hence, falls under the charge of Section 2(35)(b) of the Act, which requires a notice to treat him as the Principal Officer of accused No.1. The mandatory requirement is not complied; hence, accused No.2 cannot be treated as Principal Officer of accused No.1. The notice dated 21.10.2018 cannot be considered as the notice under Section 2(35) of the Act. It is contended that Income Tax Officer (TDS) do not have the jurisdiction to issue such notice. The Commissioner of Income Tax (TDS) did not issue the show cause notice to accused No.2 before according the sanction. Accused No.2 was not involved in day-to-day affairs of accused No.1. The complaint was filed without the direction of the Officers stated in the proviso annexed to Section 279(1) of the Act, hence, the prosecution is not valid. Even if the offence is committed, it is without the knowledge of accused No.2 and hence, he is not liable for any punishment in view of the proviso attached to Section 279B of the Act. The qualified person in the Accounts Department of accused No.1 was entrusted with the responsibility of deducting TDS and remitting the TDS. Accused No.2 has not signed on Form No.16A. It is contended that single order of sanction is passed for the entire financial year, but the TDS returns and statements are filed once in a quarter. The complaint is not filed within 30 days from the date of passing the sanction order and it is contrary to the Standard Operating Procedure. 4. The complainant has filed statement of objections before the Trial Court contending that all the procedure and legal requirements have been followed and whether there existed justifiable reasons for not remitting the TDS or accused No.2 was not in-charge of the affairs of accused No.1 is a matter of trial and prayed to dismiss the application. within 30 days from the date of passing the sanction order and it is contrary to the Standard Operating Procedure. 4. The complainant has filed statement of objections before the Trial Court contending that all the procedure and legal requirements have been followed and whether there existed justifiable reasons for not remitting the TDS or accused No.2 was not in-charge of the affairs of accused No.1 is a matter of trial and prayed to dismiss the application. 5. Based on the contention taken by the respondents herein and also the statement of objections of the petitioner herein, the point that arise for the consideration is whether accused No.2 proves that there are no evidence to frame the charge against him along with accused No.1 for the offence punishable under Section 276B of the Act. The Trial Court while answering to the said point, came to the conclusion that there are no material to prima facie hold that accused No.2 was treated as the Principal Officer of accused No.1, so as to try him along with accused No.1 for the offence punishable under Section 276B of the Act and consequently, the application filed under Section 245 of Cr.P.C was allowed and accused No.2 was discharged and hence, the present revision petition is filed before this Court. 6. The learned counsel appearing for the petitioner would vehemently submit that the Court below has committed an error in coming to the conclusion that there are no prima facie material to hold that respondent No.2 herein was treated as Principal Officer of respondent No.1 company so as to try him along with respondent No.1. Hence, the very approach of the Trial Court is erroneous. The Trial Court has held that no notice is issued to respondent No.2 herein and the same is mandatory under the Act and the Trial Court also relied upon the judgments passed in ITO vs Roshini Cold Storage and Homi Phiroze s State of Maharastra rendered by Madras high Court and Bombay High Court. The Trial Court has held that notice issued under Section 2(35) of the Act which is served on respondent No.2 cannot be considered as notice issued under the said Section since it is not stated in the said notice that respondent No.2 herein was in-charge of day-to-day affairs of the company or not. The very finding of the Trial Court is erroneous and the very approach of the Trial Court is that the notice issued under Section 2(35) of the Act was valid and legally sustainable one and the same has not been considered by the Trial Court in a perspective manner and hence, it requires interference of this Court. 7. After hearing the matter, this Court directed the petitioner to place the document at Ex.P2 to see whether anything is stated with regard to the compliance of Section 2(35) of the Act and the learned counsel produced the document and submits that in terms of the letter dated 21.10.2018, for having not remitted the amount, notice was issued and show cause notice was also given. 8. Per contra, the learned counsel appearing for the respondents would submit that the Trial Court having considered the grounds urged by the respondents and also the contention of the complainant, in detail discussed in paragraphs 7 to 15 and while arriving for conclusion taken note of Ex.P2 and in paragraph 17 it has been observed that in terms of notice only accused No.2 was asked to why the prosecution should not be initiated against him for the offence punishable under Section 276B of the Act and Ex.P2 notice cannot be considered as the notice under Section 2(35) of the Act, accused No.2 cannot be tried as accused along with accused No.1 and hence, ordered to be discharged accused No.2 and hence, there is no merit in the revision petition to exercise the revisional jurisdiction. 8. Per contra, the learned counsel appearing for the respondents would submit that the Trial Court having considered the grounds urged by the respondents and also the contention of the complainant, in detail discussed in paragraphs 7 to 15 and while arriving for conclusion taken note of Ex.P2 and in paragraph 17 it has been observed that in terms of notice only accused No.2 was asked to why the prosecution should not be initiated against him for the offence punishable under Section 276B of the Act and Ex.P2 notice cannot be considered as the notice under Section 2(35) of the Act, accused No.2 cannot be tried as accused along with accused No.1 and hence, ordered to be discharged accused No.2 and hence, there is no merit in the revision petition to exercise the revisional jurisdiction. 9. Having heard the respective counsel appearing for the parties and also on perusal of the material on record, no doubt, in terms of Ex.P2 notice the averment is made that it is seen from the records that the respondent No.2 had deducted tax of Rs.4,69,806/- and not remitted the same to the Central Government account within the time and hence in paragraph 3 of Ex.P2 also stated with regard to the punishment provided and also asked to show cause for non-payment of the amount. First of all, the very contention of the respondent No.2 before the Trial Court is that he is not the Managing Director of accused No.1 and he is only a Director of accused No.1 and hence, as per Section 2(35) of the Act, which requires a notice to him as Principal Officer of accused No.1. The mandatory requirement is not complied with and the very contention is also that the notice given in terms of Ex.P2 is not in compliance of Section 2(35) of the Act. The Trial Court also taken note of the judgments referred supra while coming to such a conclusion and in paragraph 17 the Trial Court categorically held that Ex.P2 notice cannot be considered as the notice under Section 2(35) of the Act. This Court also directed the petitioner counsel to place the said document to see whether the said notice is in compliance of Section 2(35) of the Act or not and on perusal of the said document dated 21.10.2018, I do not find any error committed by the Trial Court in coming to the conclusion that Ex.P2 is not in compliance with Section 2(35) of the Act and the very reasoning given by the Trial Court is not suffers from any perversity or illegality and the scope of the revision is if the order passed by the Trial Court is not in pursuance of the provisions and suffers from any illegality and correctness, then only the Court can invoke the revisional jurisdiction. The reasons assigned by the Trial Court, while coming to the conclusion that Ex.P2 is not in consonance with Section 2(35) of the Act, is not suffers from any illegality and correctness. Hence, I do not find any grounds to entertain the revision petition and set aside the order of the Trial Court. 10. In view of the discussions made above, I pass the following: ORDER The revision petition is dismissed. Sd/- JUDGE SN